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Bank discounts are an example of a bank charge that is made for payment of a note at some point prior to maturation. In some cases, the bank discount is applied at the time that the note or loan is extended, and is automatically deducted from the loan amount that is used to calculate the schedule of payments on the loan. This in effect means that the receiver of the loan simply repays the face value of the loan, and little or no interest.

Generally, banking institutions require compliance with a rigid set of qualifications in order for an individual or business to obtain a bank discount. One of the more common requirements for a bank discount is a solid record of previous financing with the institution. Prior repayment of loans that took place within the terms of the loan certainly influence consideration for the extension of a bank discount. If the past loan history shows no late payments and no complications with the loans, then the chances for receiving a bank discount are greatly improved.

The level of bank credit is also a factor as well. From this perspective, the eligibility for receiving a bank discount is impacted by the current assets and liabilities of the borrower. If there is a high credit rating and it is easy to demonstrate that there is a healthy difference between assets held and outstanding balances owed, the chances for obtaining a bank discount are enhanced a great deal.

In legal terms, the word liability refers to fault. The person who is at fault is liable to another because of his or her actions or failure to act. One example is in the case of a crime. The liability of the offending party may include providing restitution for damage to property or paying medical bills in the case of physical injury.

Another example of liability in the legal realm is an automobile accident. The person who caused the accident, through action or omission, is liable to the injured party. Liability insurance exists for just such a purpose. It covers the expenses of the injured party, including damage to the vehicle or other property as well as a certain amount of medical expenses, and may reimburse the injured party for attorney's fees if civil action is required.

In accounting terms, liability describes an obligation. It refers to money owed to complete a transaction, debt that has yet to be paid, or products or services that have been paid for but have not yet been rendered. There are two general classifications to sum up these types of liability: long term and short term. Long-term describes debt paid out over more than one year, while short-term liability refers to debt paid within a year or less.

Some other examples of liability include money that is yet to be paid out, such as benefits from a life insurance policy or a settlement, either one of which represents a liability for the insurance provider. An employee's pension, as well as any other savings or retirement fund, is also considered a liability for a company. For the consumer, liabilities may include a home mortgage, second mortgage, line of credit, lien of any kind or car payment. Of course, for the entity to which these monies are owed, each item generally represents an asset.

Overall, liability simply describes some form of obligation or responsibility. It represents an outstanding debt, products or services that have yet to be provided, or acknowledgment of responsibility and payment provided for damage caused through actions or negligence.

The underlying purpose of a bank discount is to reward individuals and businesses for practicing excellent financial management. Because these types of customers are considered to be such good credit risks, the bank can afford to extend a bank discount, with the expectation of being able to do business with the borrower in future projects. Along with the ongoing business relationship, there is also the good word of mouth that is generated for the bank. Happy customers tend to promote the bank to acquaintances, which may also help the bank to indirectly build a larger base of depositors and customers.

Of course, it is important to note that a bank discount can be revoked. This could happen during the course of the loan. Should the borrower fail to make a payment, or becomes unable to continue to make payments, then there is a good chance that the bank discount would be applied to the remaining balance. From this perspective, borrowers want to continue to make payments in a timely manner for the duration of the loan, in order to maintain the bank discount.---wisegeek.com